EXHIBIT 10.1


 


BUSINESS OPPORTUNITY
AGREEMENT


 


THIS BUSINESS OPPORTUNITY AGREEMENT
(this “Agreement”) is entered into this [    ] day of [            ],
2008, by and among K-Sea GP Holdings LP, a Delaware limited partnership (“Holdings”),
K-Sea Transportation Partners L.P., a Delaware limited partnership (the “MLP”),
and K-Sea General Partner GP LLC, a Delaware limited liability company and
general partner of the MLP (“MLP GP,” and together with the MLP and their
respective Subsidiaries, the “Partnership Parties”).


 


RECITALS


 


The parties hereto desire,
by their execution of this Agreement, to evidence the terms and conditions
pursuant to which business opportunities available to the Partnership Parties
and Holdings will be addressed.


 


WHEREAS, the K-Sea Entities
(as defined below) are parties to the Omnibus Agreement (as defined below),
pursuant to which controlled Affiliate (as defined below) of the K-Sea Entities
are prohibited from engaging in certain businesses (pursuant to Article II
of the Omnibus Agreement);


 


WHEREAS, in connection with
the initial public offering of the common units representing limited partner
interests in Holdings (the “Initial Public Offering”), and the transactions
related thereto, Holdings will no longer be a controlled Affiliate of the K-Sea
Entities and will not be bound by Article II of the Omnibus Agreement;


 


WHEREAS,
it is the intent of the parties hereto to be bound by the provisions of this
Agreement effective immediately upon the closing of the Initial Public Offering.


 


In consideration of the
premises and the covenants, conditions, and agreements contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:


 


ARTICLE I: 

DEFINITIONS


 


Section 1.1             Definitions.


 


(a)           Capitalized terms used
herein but not defined herein shall have the meanings given them in the MLP
Agreement (as defined below).


 


(b)           As used in this Agreement,
the following terms shall have the respective meanings set forth below:


 


“Affiliate” shall have the
meaning set forth in the Omnibus Agreement.


 


“Agreement” shall mean this Business
Opportunity Agreement, as it may be amended, modified, or supplemented from
time to time.


 

















 


“Conflicts Committee” means
a committee of the Board of Directors of Holdings GP or MLP GP, as applicable,
as defined in the Holdings Agreement or the MLP Agreement, respectively.


 


“Holdings” means K-Sea GP
Holdings LP, a Delaware limited partnership, and any successors thereto.


 


“Holdings Agreement” means
the Amended and Restated Agreement of Limited Partnership of Holdings, and any
amendments thereto and restatements thereof.


 


“Holdings GP” means K-Sea GP
LLC, a Delaware limited liability company, and any successors thereto.


 


“K-Sea Entities” shall have
the meaning set forth in the Omnibus Agreement.


 


“K-Sea Entity” means any of
the K-Sea Entities.


 


“MLP” means K-Sea
Transportation Partners L.P., a Delaware limited partnership, and any
successors thereto.


 


“MLP Agreement” means the Third
Amended and Restated Agreement of Limited Partnership of the MLP, and any
amendments thereto and restatements thereof.


 


“MLP GP” means K-Sea General
Partner GP LLC, a Delaware limited liability company,
and any successors thereto.


 


“Omnibus Agreement” means the
Omnibus Agreement, dated as of January 14, 2004, among K-Sea Investors
L.P., New K-Sea Transportation LLC, K-Sea Acquisition Corp., New EW Holding
Corp., New K-Sea Transportation Corp., K-Sea General Partner L.P., MLP GP, the
MLP, K-Sea OLP GP, LLC and K-Sea Operating Partnership L.P.


 


“Partnership Parties” means
the MLP, the MLP GP and their respective subsidiaries.


 


“Person” means an individual
or a corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, association,
government agency or political subdivision thereof or other entity.


 


“Restricted Business” shall
have the meaning set forth in Section 2.1(a).


 


“Restricted Business Notice”
shall have the meaning set forth in Section 2.1(b).


 


“Section 7704(d)” means
Section 7704(d) of the Internal Revenue Code of 1986, as amended, and
any successor provision thereto.


 

















 


ARTICLE II: 

BUSINESS OPPORTUNITIES


 


Section 2.1             Restricted Business
Opportunity.


 


(a)           During the term of this
Agreement, Holdings is prohibited from engaging (whether directly or through
the acquisition of equity or debt interests in any Person (other than the MLP
and its subsidiaries)) in the business of providing refined petroleum product
marine transportation, distribution and logistics services in any state or
territory of the United States to the extent such business, at the time such
business is first proposed to be engaged in by Holdings, generates “qualifying
income” within the meaning of Section 7704(d) (a “Restricted Business”)
unless and until the opportunity to acquire such Restricted Business has been
offered to the Partnership Parties and the Partnership Parties have declined or
abandoned such opportunity as provided in Section 2.1(b).


 


(b)           If Holdings becomes aware of
an opportunity to acquire a Restricted Business from a third party that it
wishes to pursue, then as soon as practicable, Holdings shall notify MLP GP (on
behalf of the Partnership Parties) of such opportunity (the “Restricted
Business Notice”) and deliver to MLP GP all information prepared by Holdings GP
relating to the Restricted Business. As soon as practicable, but in any event
within 30 days after receipt of such notification and information, MLP GP
(on behalf of the Partnership Parties) shall notify Holdings that either (i) MLP
GP has elected, with the approval of a majority of the members of the Conflicts
Committee, not to cause the Partnership Parties to pursue the opportunity to
acquire such Restricted Business, or (ii) MLP GP (on behalf of the
Partnership Parties) has elected to pursue the opportunity to acquire such Restricted
Business. If at any time the Partnership Parties abandon such opportunity, as
evidenced (x) in writing by MLP GP (on behalf of the Partnership Parties),
or (y) by the Partnership Parties’ failure to consummate the acquisition
of the Restricted Business within one year of the Restricted Business Notice,
Holdings shall have the unrestricted right to pursue such opportunity.


 


Section 2.2             No Obligation to Present
Business Opportunities.


 


Other than as set forth in Section 2.1
with respect to Restricted Businesses, Holdings shall have no obligation to
present any business opportunity to the Partnership Parties and their
Affiliates.


 


Section 2.3             Scope of Prohibition.


 


Except as provided in this Article II
and in the MLP Agreement or the Holdings Agreement, the Partnership Parties and
Holdings shall be free to engage in any business activity whatsoever, including
those that may be in direct competition with each other.


 

















 


Section 2.4             Term.


 


This Agreement shall remain
in effect for as long as Holdings or any of its Affiliates owns directly or
indirectly 50% or more of MLP GP.


 


Section 2.5             Enforcement.


 


The parties agree and
acknowledge that there is no adequate remedy at law for the breach by the parties
of the covenants and agreements set forth in this Article II, and that any
breach by the parties of the covenants and agreements set forth in Article II
would result in irreparable injury. The parties further agree and acknowledge
that any party to this Agreement may, in addition to the other remedies which
may be available hereunder or under applicable law, file a suit in equity to
enjoin the violating party from such breach, and the parties consent to the
issuance of injunctive relief hereunder.


 


ARTICLE III: 

MISCELLANEOUS


 


Section 3.1             Choice of Law.


 


This Agreement shall be
subject to and governed by the laws of the State of Delaware, excluding any
conflicts-of-law rule or principle that might refer to the construction or
interpretation of this Agreement to the laws of another state.


 


Section 3.2             Notice.


 


All notices or requests or
consents provided for or permitted to be given pursuant to this Agreement must
be in writing and must be given by depositing same in the United States mail,
addressed to the Person to be notified, postpaid, and registered or certified
with return receipt requested or by delivering such notice in person or by facsimile
to such party. Notice given by personal delivery or mail shall be effective
upon actual receipt.  Notice given by facsimile
shall be effective upon actual receipt if received during the recipient’s
normal business hours, or at the beginning of the recipient’s next business day
after receipt if not received during the recipient’s normal business hours.  All notices to be sent to a party pursuant to
this Agreement shall be sent to or made at the address set forth below such
party’s signature to this Agreement, or at such other address as such party may
stipulate to the other parties in the manner provided in this Section 3.2.


 


Section 3.3             Entire Agreement;
Supersedure.


 


This Agreement constitutes
the entire agreement of the parties relating to the matters contained herein,
superseding all prior contracts or agreements, whether oral or written,
relating to the matters contained herein.


 


Section 3.4             Effect of Waiver or Consent.


 


No waiver or consent,
express or implied, by any party to or of any breach or default by any Person
in the performance by such Person of its obligations hereunder 


 

















 


shall be deemed or construed to be a consent or waiver to
or of any other breach or default in the performance by such Person of the same
or any other obligations of such Person hereunder. Failure on the part of a
party to complain of any act of any Person or to declare any Person in default,
irrespective of how long such failure continues, shall not constitute a waiver
by such party of its rights hereunder until the applicable statute of
limitations period has run.


 


Section 3.5             Amendment or Modification.


 


This Agreement may be amended
or modified from time to time only by the written agreement of all the parties
hereto. Each such instrument shall be reduced to writing and shall be
designated on its face an “Amendment” or an “Addendum” to this Agreement.


 


Section 3.6             Assignment.


 


No party shall have the
right to assign its rights or obligations under this Agreement, by operation of
law or otherwise, without the consent of the other parties hereto.


 


Section 3.7             Counterparts.


 


This Agreement may be
executed in any number of counterparts with the same effect as if all signatory
parties had signed the same document. All counterparts shall be construed
together and shall constitute one and the same instrument.


 


Section 3.8             Severability.


 


If any provision of this
Agreement or the application thereof to any Person or circumstance shall be
held invalid or unenforceable to any extent, the remainder of this Agreement
and the application of such provision to other Persons or circumstances shall
not be affected thereby and shall be enforced to the greatest extent permitted
by law.


 


Section 3.9             Gender, Parts, Articles and
Sections.


 


Whenever the context
requires, the gender of all words used in this Agreement shall include the
masculine, feminine and neuter, and the number of all words shall include the
singular and plural. All references to Article numbers and Section numbers
refer to Parts, Articles and Sections of this Agreement, unless the context
otherwise requires.


 


Section 3.10           Withholding or Granting of
Consent.


 


Each party may, with respect
to any consent or approval that it is entitled to grant pursuant to this
Agreement, grant or withhold such consent or approval in its sole and
uncontrolled discretion, with or without cause, and subject to such conditions
as it shall deem appropriate.


 

















 


Section 3.11           Laws and Regulations.


 


Notwithstanding any
provision of this Agreement to the contrary, no party hereto shall be required
to take any act, or fail to take any act, under this Agreement if the effect
thereof would be to cause such party to be in violation of any applicable law,
statute, rule or regulation.


 


Section 3.12           Binding Effect.


 


This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their heirs,
executors, administrators, successors, legal representatives and permitted
assigns.


 


Section 3.13           Negotiation of Rights of
Limited Partners, Assignees, and Third Parties.


 


The provisions of this
Agreement are enforceable solely by the parties to this Agreement, and no
limited partner, assignee, member or other Person
shall have the right to enforce any provision of this Agreement or to compel
any party to this Agreement to comply with the terms of this Agreement.


 


[signature
pages follow]


 

















 


IN WITNESS WHEREOF, the parties
have caused this Agreement to be duly executed by their respective authorized
officers as of the date first written above.


 


 


	
   

  	
  K-SEA GP
  HOLDINGS LP

  
	
   

  	
   

  
	
   

  	
  By: K-Sea GP LLC, its
  general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Address for Notice:

  
	
   

  	
  One Tower Center
  Boulevard, 17th Floor

  
	
   

  	
  East Brunswick, New Jersey
  08816

  
	
   

  	
   

  
	
   

  	
  K-SEA
  TRANSPORTATION 

  PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:
  K-Sea General Partner GP LLC, its 

  general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Address for Notice:

  
	
   

  	
  One Tower Center
  Boulevard, 17th Floor

  
	
   

  	
  East Brunswick, New Jersey
  08816

  
	
   

  	
   

  
	
   

  	
  K-SEA GENERAL PARTNER GP LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Address for Notice:

  
	
   

  	
  One Tower Center
  Boulevard, 17th Floor

  
	
   

  	
  East Brunswick, New Jersey
  08816